This is the interest rate at which RBI lends money to the commercial banks or financial institutions. Banks make a profit by borrowing at a lower rate and lending the same funds at a higher rate of interest. If the RBI hikes the bank rate, the interest rate at which the banks lend to the people, is also raised to earn profit.

Repo or Repurchase rate

This is the rate at which banks borrow funds from the RBI. If the RBI wants to make it more expensive for the banks to borrow money, it increases the repo rate; similarly, if it wants to make it cheaper for banks to borrow money, it reduces the repo rate.

Reverse Repo rate

This is the rate at which the RBI borrows money from commercial banks or other financial institutions in order to cut the money supply in the economy.

Cash reserve ratio

It is the minimum amount of deposits to be kept by the banks with RBI. It is used to regulate the money supply in the economy. If RBI wants to increase the money supply it will decrease the Cash reserve ratio and vice-versa.

Statutory Liquidity ratio

It indicates the minimum percentage of deposits that a bank has to maintain in the form of cash, gold or any other type of approved securities. It also helps to regulate credit in the Economy.